Push to lock up superannuation savings until age 67

By Misha Schubert, Daniella Miletic and Peter Martin

AUSTRALIANS could be forced to wait until they are 67 to get access to their superannuation savings under a radical proposal to be considered later this year by the Rudd Government.

A day after flagging a rise in the pension age to 67, the Government has confirmed it will look at introducing the same age limit for super access - in effect making 67 a universal minimum retirement age.

Jane Chisholm, 53, rejects the idea of having to work longer to access super or the pension.Credit:Justin McManus

Bringing the superannuation age into line with a higher pension age was recommended by Treasury secretary Ken Henry in a review published with the federal budget papers on Tuesday.

Dr Henry's plan, for a phased lifting of the super age from 60 to 67 from 2024, is part of a broad push to keep Australians at work longer to help the nation cope financially with its ageing population.

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A spokesman for Treasurer Wayne Swan said the Government would "thoroughly assess the findings of the Henry review when they are delivered at the end of the year". But he stressed that the super issue would not be considered before then.

The plan could be even more controversial than the budget decision to lift the pension age.

Jane Chisholm, 53, was unhappy enough at the idea of having to stay in the workforce beyond 65 before she could even think about applying for the age pension.

But she expressed stronger misgivings at the proposal to lift the super access age. While she understood the need to prepare the nation for people living and working longer, she said the super proposal was cruel.

"People like to think they could have control of the money that is there for their retirement," Ms Chisholm said. "If you want to go travelling and do some of the things you want to do, it's just putting it closer to the 70 mark, when you can't count on your health."

The move to raise the pension age sparked fierce debate, with critics saying it would entrench inequality and force more old people into poverty.

Mr Swan said the decision was needed to keep pensions sustainable. "Currently we have five workers in Australia for every person aged 65 and over and by 2050, that will be 2½," he said in a post-budget interview.

"Life expectancy has increased by 23 years since the age pension came in," he said. "Twice as many people are going on it for twice as long."

Opposition Leader Malcolm Turnbull supported the pension age increase, saying his only concern was that it would not come in soon enough.

National Seniors also backed the move, noting that it would not come in until 2023.

But critics highlighted the contrast between the rich getting access to super at 60 (at least under existing rules), while the poor were being forced to work or stay on the dole until 67.

The Combined Pensioners and Superannuants Association warned the move would add to poverty among over-65s and force some to toil longer at hard physical labour. "People in their 50s and 60s are often unable to find adequate employment," said the association's policy officer, Charmaine Crowe.

But she backed the idea of aligning the pension and superannuation ages, saying it would ensure more equality between richer and poor retirees, keep skilled people in the workforce longer and boost super savings.

Sydney University workplace relations centre analyst Michael Rafferty said increasing the pension age would entrench inequality and force some of the hardest working people in the world to work even longer.

He also pointed to what he said was a disparity between the pension decision and the mild cuts in the budget to tax breaks on superannuation. "The rich have been hit with a feather duster and the poor have been told you are going to work longer and harder," he said.

Australian Council of Social Service chief Clare Martin said lifting the pension age to 67 might disadvantage "lower-income, mature-age people with limited job prospects, who will have to remain on lower income support payments for longer".

UNSW Centre for Pensions and Superannuation deputy director John Evans said the pension age rise was a "knee-jerk" decision that could damage the vulnerable.

But Brotherhood of St Laurence chief executive Tony Nicholson said raising the pension age was inevitable to ensure the long-term sustainability of the system.

David Knox, a partner at Mercer Consulting who proposed the 67 pension age in a paper prepared for the Committee for the Economic Development of Australia, also welcomed the decision.

But he expressed dismay at the proposal to lift the super preservation age to 67.

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"The superannuation access age should generally be about five years younger than the pension age in order to provide flexibility. You cannot assume that everyone will retire at the same age, in fact today most people retire before 65."

Superannuation access is at present available at 55, with the age set to climb to 60 by 2024. The Henry Review recommends a further staged increased to 67, after which it would remain aligned with the pension age in order to stop Australians spending their super payout quickly and then getting access to the part-pension.